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|The Market Power of Fur Babies|
|Published Thursday, December 8, 2016|
Illustration by Jim Roldan
Getting out the door to daycare is complicated. Snacks, toys and a favorite stuffed animal all have to be packed and ready to go. And there is often little time between the drop off and the start of the workday. But those few minutes you stop to take in the sight of your baby bounding toward her friends full of delight with tail wagging makes the rush and effort suddenly feel worth it.
Yes, we are talking about doggie day care. More people regard their pets as not only members of the family, but their children—or fur babies—and they are spending big bucks on them. Bob Vetere of the American Pet Products Association (APPA) calls it the pet humanization trend, and for good reason. Anything you would do for a child is being done for pets: haircuts, day care, surgery, medicine, toys, booties in winter and rain coats in the fall, and special food for Fido and Mittens, including natural, nut free and organic options.
According to the 2015-2016 APPA National Pet Owners Survey, 65 percent of U.S. households—or 79.7 million homes—own a pet. Between 2001 and 2016, spending on pets nationally more than doubled from $28.5 billion to an estimated $62 billion, according to APPA. Looking ahead, the industry is expected to grow by at least 11 percent between 2014 and 2024, according to the Bureau of Labor and Statistics.
That growth means opportunity for small businesses that provide food, toys, boarding and grooming, training and health care for pampered pets.
Pets as People
When Bethany Stockman’s father started Laconia Pet Center back in the 1970s, people were skeptical he could even make a decent living selling pets. People back then bought cat and dog food at the grocery store and only fish at a pet store. “Fast forward to now,” Stockman says. “People’s pets are their lives; their dogs are their kids—that’s why they refer to them as fur babies. People do think of their pets as their children. They get included in vacation; they go to daycare.”
And it’s not just dogs; even cats have benefited from this vaunted status. “There’s a lot more available for cats now than there ever used to be,” she says. “Before you might have a catnip mouse or a ball for them to play with and bat around. Now there’s everything from bubbling water fountains to $600 cat trees. It’s amazing the amount of things that have come out for cats.”
Stockman says that treating pets like humans has increased as younger Gen Xers and Millennials delay having actual children. “People are waiting to have children, and they get a pet to fill that little bit of a void,” she says.
Dave Jensen, president of Lupine Inc. in Conway, a manufacturer of collars, harnesses and leashes for cats and dogs, says it’s not just young couples delaying parenthood that have been driving this trend of pampering pets. Boomers who are empty nesters and senior citizens in need of someone to dote on are also reaching deeper into their pocketbooks for their pets. “For all these demographic groups, pets are more and more considered a part of the family than simply an animal that lives at home,” Jensen says.
While that means more potential sales for Laconia Pet Center, it also means more competition. Stockman, who grew up in her father’s business and now owns it with her brother, has watched as big-box pet stores have forced other smaller, independent mom and pop shops to shutter their doors over the past decade. “We had a Petco open up down the street a couple of years ago,” Stockman says. “Business dropped because of it…. We have started to come back, but we lost people through the door.”
The Internet also cut into their business, but Stockman says her shop, like other independent shops, have found expert knowledge and great customer service to be the keys to their survival.
Lupine Inc. favors smaller retailers and has never sold its products at big box stores. The company did experience a dip in sales during the recession due to independents' vulnerability to economic turbulence, but Jensen still feels it's important to support smaller retailers.
Lupine was started by Jensen, his wife Valerie and college roommate Scott Badger in 1990 after Valerie, who was working for a mountaineering company at the time, created a durable nylon collar for Badger’s wolf-hybrid pup. The collar received such a positive response that the trio went into business together.
Since then, the company’s designs, durable products and lifetime replacement guarantee have made it a staple at 7,000 retailers nationwide. The company generates approximately $6 million in revenue annually manufacturing collars, leashes and harnesses with more than 70 employees.
Rising Health Care Costs…For Pets
While people may gripe about the rising cost of their own health care, they seem to be willing to open their wallets to keep a beloved pet well. The average cost of treatment for the top 10 medical conditions in dogs (from skin infections to a benign skin mass) ranges from $118 to $339, according to PetMD.com. It’s even costlier for cats, ranging from $185 for intestinal upset to $1,959 for lymphoma. Surgeries can rack up even bigger bills including $8,539 for cancer of the liver in dogs and $1,508 to remove cancer from a cat, according to PetMD.
And just as there is demand for health care professionals for humans, demand is also on the rise for veterinarians. In 2014, there were approximately 78,300 veterinarians in the United States, according to the Bureau of Labor Statistics (BLS). The field is expected to add another 6,900 veterinarians by 2024, a 9 percent increase. The annual pay for veterinarians in 2015 was $88,490, according to BLS.
Those health care costs are driving another pet market—pet insurance. More than 1.6 million pets were insured in North America in 2015, a 12 percent increase from 2014, according to the 2016 State of the Industry Report released by the North American Pet Health Insurance Association. The lion’s share of those insured—88 percent—is in the United States.
Almost all pet insurance plans—97 percent—cover accident and illnesses, which includes covering wellness costs, while only 3 percent were accident only insurance, according to the report. And there is a big difference in the average annual costs of those premiums—$464 for accident and illness plans versus $160 for accident-only plans. Total premiums paid for pet insurance in the United States has risen from $499.8 million in 2013 to $688.9 million in 2015.
“Veterinarians are able to do a lot of great things. With that comes a cost. It can get pretty hefty at times. People have to make a personal decision as to treatment for their animal,” says Ken Lawrence, owner of Pet Pawlicy in Goffstown, which sells pet insurance as an affiliate of Pet Plan, a national pet insurer based in Philadelphia.
Pet Pawlicy owner Ken Lawrence greets one of his "clients" at a recent Pet Expo. Courtesy photo.
When Lawrence started his business more than two years ago, he had to become certified with the state to sell property and casualty insurance. He initially sold plans to individual pet owners but has now changed his business model to sell pet insurance through companies as an employee benefit.
“Businesses are looking for ways to keep employees. Pet health insurance, because it’s a voluntary benefit, doesn’t cost the employer anything. There’s not even a payroll deduction. Employees do it through a credit card [through the insurance web site],” he says, adding that employees receive a 10 percent discount on the cost of the insurance.
Lawrence says when policy owners have a claim, they pay the bill and submit it to the insurance company to be reimbursed at whatever percentage was selected in the policy. “What it comes down to is they [pet owners] don’t want to be put in a financial situation to chose between their wallet and their pet.”
There’s even a market for pets that need assistance getting around. Before Mark C. Robinson got into the pet business, he was just another pet owner staring at the bleak prospect of having a special needs pet whose only option, as his veterinarians saw it, was euthanasia.
In Robinson’s mind, his epileptic keeshond Mercedes was taken much too soon, and after reading online resources about caring for disabled pets several years later, he says he wishes he could have made a more informed choice. So he created HandicappedPets.com in Amherst, an online community for pet owners to discuss treatment for their animal's illnesses. “My job is to let people know that a mobility issue does not have to be an end-of-life decision,” says Robinson.
Injured pets from lambs to dogs get help walking from HandicappedPets.com. Courtesy Photo.
In response to discussions on the forum, Robinson and engineer Mike McGuire, developed Walkin’ Wheels, a lightweight, customizable set of wheels that fit to the back end of a pet, allowing it to be mobile. He launched the product in 2008. While these sorts of pet wheelchairs existed before Robinson, they were often impractical and expensive, typically costing a couple thousand dollars.
Robinson’s wheels have been fitted to ferrets, pigs, rats and goats among other animals. His business has expanded to include skis, front wheels and new harnessing systems and are now sold internationally to clients in countries like China, Turkey, Brazil, and India, Robinson says.
High End Eating
More pet owners are eschewing the traditional grocery store kibble for more natural, high quality and, if they can get it, locally sourced eats for their pets.
“We got started because of our dog Oscar,” says Sarah Desiderio, recalling how she started her all natural pet food company, Purely Oh Dog Bakery in Fremont. “He developed terrible food allergies and sensitivities. What we eventually learned is that he requires a limited ingredient, grain-free, gluten-free diet.”
Natural pet treats from Purely Oh Dog Bakery in Freemont. Courtesy Photo.
Purely Oh Dog Bakery makes some of its treats with peanut butter that is made with just blanched peanuts and peanut oil, Desiderio says. “We also use apple sauce in some of our recipes. That too we make ourselves. Just apples and a little water, nothing else. As a New Hampshire-based company, we strive to use local New Hampshire ingredients whenever possible. We have found that our New Hampshire customers really appreciate that detail of our company.”
Though Desiderio says she’s still getting her business up and running, other local success stories lend her a good omen. Amy Rybcyzk owns Manchester-based Gunther’s Goodies, which makes dog treats from spent beer-making grains. She says she has doubled her business annually since launching five years ago. She explains that when beer is made, the grains are steeped in hot water that causes the carbohydrates to melt into sugar used to ferment into alcohol. The leftover grains, which contain no alcohol, retain all the protein and vitamins, which Rybcyzk uses to make dog treats.
She started selling the goodies at local breweries where she was procuring her spent grains. But her market has expanded to 29 stores, including select Whole Foods stores in NH, Massachusetts and Connecticut. And just recently, Shipyard Brewery in Maine asked her to make treats with its spent grains that will be sold in its gift shop.
There is a long list of businesses in NH with their own spin on dog and pet food and treats, including Barkin’ Biscuit in Bedford that creates all-natural dog treats using organic fruit and vegetables, and Wholistic Pet Organics, also in Bedford, that manufactures certified organic all-natural animal health products and supplements.
They are part of a national trend. According to the APPA, the food category remains the leading source of dollars spent in the industry. Spending on food for pets in 2016 is expected to reach $24 billion, the APPA reports.
Many pet owners like to pamper their pooches and kitties with luxury services like day care, spa treatments, behavioral consultants, pet sitters and exercise services among many others. Between 2014 and 2015, pet owners spent $5.41 billion on services, a spike of 11.8 percent.
Dorinne Whynott, owner of Professional Pet Sitting Etc. in Nashua, says she’s noticed a huge uptick in her pet sitting and dog walking business in the past several years. Whynott began her business back in 1990 when the concept of dog walking and pet sitting was not as common. The increase in Whynott’s business is reflective of people recognizing that their pets are social creatures who need activity and companionship during the day. And now, despite generations of pet owners believing cats were immune to loneliness and largely self-sufficient, even cat owners are calling on Whynott and her sitters to come in for an hour or two of playtime and litter box maintenance.
It’s this service that’s given rise to another trend related to the boom in the granite state’s senior population: More assisted living facilities are allowing elderly people to keep their pets. Having a pet sitter come in to help with the food and litter a few times a week is making that possible. Also, she says, it’s a good way for loved ones to check not only on the pet, but the elderly owner. One of Whynott's sitters found an elderly client unconscious when she came in to pet sit and was able to call an ambulance and get her to the hospital on time.
And to help busy people on the go who still want a pet, there is no shortage of pet day care facilities around the state.
Gail Fisher, a certified dog behavior consultant and owner of All Dogs Gym in Manchester, has benefited from the growing popularity of pet day cares. When she launched her business in 1993, the concept of doggie day care was new and certainly not something tried and tested in NH.
Two dogs enjoy some play time at All Dogs Gym. Courtesy Photo.
Well-meaning friends cautioned that Granite Staters would never pay good money to have their dog watched during the day. But wanting to earn a little extra money, she decided to start a dog day care. Right away she started getting calls.
“Within two or three years we had outgrown our facility,” she says. “And it was an 11,000-square-foot facility.” Fisher eventually built a new facility that expanded her business to include boarding and other services. She also added other specialty, high-end features such as sport training, early puppy training, private training for dogs with major behavior problems and an arena that hosts dog, cat and bird shows.
Fisher says being in the business for so long, the biggest trend she’s noticed among pet owners is that more are rescuing dogs. While this is a noble effort, many of these dogs are purchased sight unseen and come to their new owners with multiple health problems and severe behavioral problems.
But rather than give up on these dogs, many of these owners are paying a premium to get them private lessons, training and rehabilitation, Fisher says.
Anne Nichols, owner of K9 Kaos in Dover, which specializes in boarding, grooming, day care and training, says she too has seen her day care business explode. In just 12 years, she’s gone from three employees to 25, and experienced revenue growth of 15 to 20 percent annually. Further, she has 53 boarding runs that are generally filled every weekend between Memorial Day and Labor Day, she says, and it’s not unusual for her to run five groups of dogs during her day care. “I can say [our daycare] is gangbusters now,” she says.
Nichols also says she’s noticed an increase in competition with new day cares opening. But, she says, she actually doesn’t mind and that’s mostly because it allows customers to shop around and find a good fit for their dogs.
Nancy Fantom of Saddleback Pet Services in Northwood says while there is more competition, she makes her business stand out by being more personalized. For example, she wanted her pet owners and their pets to feel at home at her kennel, so she built them a full-size, manufactured Cape Cod style doghouse.
“It looks like the guest house to my old antique house,” she says. “It’s important to my customers that their dogs feel at home. So when they come in, they like seeing a rug and a couch. They feel like they are walking into somebody’s living room.”
Fantom says pet owners seek out this level of service for their pets. It even helped steer her business through the Great Recession. While people were cutting back on the number of vacation days they were taking, they didn’t want to cut back on the quality of care for their pets, and her business has grown each year.
She’s even been able to attract a large clientele from Boston and speculated that many of her boarding clients drive an average of 25 minutes to leave their dogs with her. “Pet owners today want the personal service,” she says. “They want their dogs to have their beds, their toys, to socialize. They don’t want a stack and store mentality.”
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